RACE for the win…
On April 7, 2016, I put out a trade on Ferrari (NYSE: RACE), which banked 125% in just a few weeks.
Ferrari is, of course, the company that makes super-cars. But how did I know that the stock would dip and then go up again, as you can see in this chart? It’s simple. This pattern repeats itself…
The trick is getting yourself positioned for the big move. I’ll tell you how in a minute.
You see, I’ve been trading IPO unlocks for almost 20 years. And my readers have made money time and time again…
When a company has an initial public offering (IPO) — that is, it sells shares of itself on an exchange like the NYSE or the NASDAQ — it must abide by certain rules.
These rules are laid down by a government regulator called the Securities and Exchange Commission (SEC). The SEC dictates that a company cannot dump all of its shares into the open market the first day of trading.
The regulators want to avoid the appearance of a “pump and dump.”
So insiders must wait six months to sell. This date six months after an IPO is called the “unlock date.” It is when insiders can dump shares. It is also when the quiet period ends and insiders, along with their IPO sponsor, like Goldman Sachs, can start touting the stock.
Use the SEC for Profits
The problem is that unlock dates are public knowledge. Traders know when they are coming, and fearing a ton of new shares hitting the market at once, they start to sell the stock.
This happens time and time again, almost like clockwork… And it sets up the “Flying V” trade you see in the chart above.
You simply short the stock going into the unlock date, sell a week before, and go long for the rebound.
The stock bounces back because once the quiet period is over, the sponsors, who are big brokers and own shares, start hyping the stock through buy recommendations and positive research.
Meanwhile, the CEO starts going on TV and talking up his or her company.
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This trade works — a lot.
I have a spreadsheet with 192 different gains, with winners ranging as high as 187%.
Here’s a snapshot of the spreadsheet…
And those are just 10 of the gains. If you could see the full rundown, you’d be able to scroll through 182 other winners just like these.
I’d like to tell you more about these highly profitable lockout cycles.
We have seven chances to profit in the next two weeks, including Match Group (NASDAQ: MTCH), which is the online dating company.
Click here now. The Match opportunity will run out on May 17th.
All the best,
Christian DeHaemer
Check us out on YouTube!Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor’s page.
